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New Delhi: The rupee today weakened past the 70-a-dollar mark at the interbank foreign exchange amid a spike in crude oil prices. At 11:53 am, the rupee was trading at 70.04 against the US dollar, down about 46 paise from its previous close. The rupee had closed at a four-month high of 69.58 against the US currency on Friday. A lower-than-expected Q2 GDP growth of 7.1% also hurt the sentiment. Meanwhile, in stock markets, the Sensex gave up most of its early gains.
Five things to know about rupee’s fall today:
1) The surge in crude price is putting pressure on rupee, forex advisory firm IFA Global said in a note. Global oil prices surged over 5% today after the US and China agreed to a 90-day truce in their trade war. Reports, citing sources, have also said that Russia had accepted the need to cut production, together with OPEC ahead of its meeting next week.
2) India imports about 80% of its crude oil requirements. India’s trade deficit is under structural pressures from rising electronics-goods import and higher oil prices, said Khoon Goh, head of research at Australia & New Zealand Banking Group.
3) The rupee had hit a record low of 74.48 in October against the US dollar. But a sharp fall in global oil prices eased some concerns over India’s current and fiscal deficit, helping a rebound in the rupee.
4) The renewed interest of foreign investors in Indian markets had also helped the rupee pull back from its October lows. Overseas investors pumped Rs 12,260 crore into the Indian capital markets in November, making it the highest inflow in 10 months due to falling crude oil prices and sharp rupee appreciation.
5) However, so far this year, the rupee is down about 8% against the US dollar. Apart from the OPEC meeting this week, forex traders will also watch RBI’s policy decision later this week. Most economists expect the RBI to hold rates steady. “RBI policy, OPEC decision and UK parliament vote, domestic state election results are next big events to watch out for in near future,” said IFA Global.